What would Fed policy and more importantly, the state of our economy, be like today had congress actually stepped up to the plate and done their job regarding effective financial and banking regulation, effective tax reform and balancing the damned budget?

Many things are unsustainable with QE : a) there are profiters and excluded from the cornucopia, and b) the sense of political responsibility to maintain two antagonist talks to common people - money is to be earned patiently - and to finance TBTF dominators - don't worry, we'll save you in any case - and c) politicians appear to be unable to restart a Bretton Woods conference about the rebuild of IMF-World Bank-world network of CBs on a solid basis.
Of course mastering assets inflation is an urgent challenge because banking assets don't reflect anymore the real economies, and using CBs as 2nd market rotten assets washing machines simply proves we go on with unsane habits and don't accept to put on the table the real failures of present capitalism. We definitely have to consider Keynes victory on White risky position to create the conditions of money evaluation by private markets and their monsters. Correct evaluations of economic policies cannot be made without a bancor system, and then only can start the sincerity in evaluating GDPs.
For that purpose of course all BCs must own three missions, and not just one as the ECB presently gets : working for inflation containment, for sane employment in real activities, and to regulate finance activities. Then they can effectively start to work together to stabilize the world, and it's of course a political responsibility due to the human Polis as a whole to be assumed, it's obvious to spend time and saliva to pretend the opposite and provide false theories to mask it.
Each of major CBs will then have to constantly balance between their obligations to make up local policy mix with their local governments AND to securize the world's finance and monetary system inside a kind of world democracy of central bankers. They haven't finish to walk on thightropes, but then will appear clearly which political governments are advised managers of surplusses and deficits, and which aren't.
Globalization and Bitcoin are presently served to populations as red flags or miracle solutions, but, in depth, we have just to replace Economics at it's real place, a question of political responsibility...or irresponsibility !

In a sovereign money system, interest rates reward savers. New money is created directly ( or not created) and given to government to spend. Savers' rates can go back to the normal 5% or so. The economy expands because of the supply of credit - particularly unsecured credit, not its cost. In the current system, if low interest rates are accompanied by demands from banks that borrowers provide 100% + security, where does new money in fact come from once all available security has been pledged.

I have proposed for almost a decade the feasibility of investigating a carbon standard for the unjust, unsustainable and, therefore, unstable international monetary system which like the earlier gold standard would insulate central banks from political pressure. Once nations have agreed on a carbon standard such as a specific tonnage of CO2e per person the global central bank would govern a decentralized just, sustainable and, therefore, stable international monetary system. The conceptual, institutional, ethical and strategic dimensions of such carbon-based international monetary system are presented in Verhagen 2012 "The Tierra Solution: Resolving the climate crisis through monetary transformation" and updated at www.timun.net. Climate specialist and activist Bill McKibben stated on May 17, 2011: “The further into the global warming area we go, the more physics and politics narrows our possible paths of action. Here’s a very cogent and well-argued account of one of the remaining possibilities.”

Kenneth Rogoff says Donald Trump, in his last debate with Hillay Clinton insisted that the US Federal Reserve Chair Janet Yellen let herself be politically instrumentalised, by "applying overdoses of monetary stimulus to hypnotize voters into believing that economic recovery is underway." The GOP nominee seemed to suggest that Clinton would benefit from this embellishment.
Rogoff points out that "central bankers have of course been known to help incumbents before elections," and names Fed Chair Arthur Burns under Richard Nixon an example. Burns had once said that he had to do what the president told him, if the Fed didn't want to lose its independence. Rogoff maintains it be important that the Fed remains "immune to manipulation." But central banks in most advanced economies are independent of government. The convention dictates that politicians be kept out of discussions about interest rates.
Conspiracy theory apart, in his liminality between awareness and ignorance, Trump did voice the distrust of centralised power that is deeply rooted in the American psyche. The design of the Federal Reserve over 100 years ago, in the wake of financial turmoil, and its status as the most powerful financial institution on earth ostensibly confirms this suspicion.
Responding to Donald Trump's claim that interest rates were being kept low for political reasons, Yellen responded that partisan politics played no role in the Fed's decisions about "the appropriate stance of monetary policy." She said: "We are trying to decide what the best policy is to foster price stability and maximum employment and to manage the variety of risks that we see as affecting the outlook. We do not discuss politics at our meetings and we do not take politics into account in our decisions."
But would a "return to the gold standard era of the late 1800s, when governments fixed the price of their currency in gold, leaving little scope for political interference" be a better choice? Indeed, Republicans have been clamouring for a return to the gold standard in the US. In July a GOP platform called for a commission to look into fixing the gold value of the dollar, saying gold led to sound money. In theory the supply of money can be linked to the supply of gold. Since gold reserves increase only slowly, the growth in the supply of money is limited, thus helping to curb inflation. But the gold standard would not necessarily be more stable than the current monetary system, because the fluctuation of the gold price will not be good for a currency's stability. History shows that the dollar's link to gold reserves contributed little to growth and prosperity.
Another alternative, Bitcoin, the virtual currency had lost its appeal in the wider public, because it is still an experiment, a currency of the future. Unless and until Bitcoin can be used to buy a hamburger or a coke, and be accepted widely as money, it is likely to remain virtual. Blockchain is the technology underpinning the Bitcoin digital currency, built on an encrypted database that is distributed across a computer network. But what makes it different is it can only be updated when everyone on that network agrees, and once entered the information can't be overwritten, making it extremely secure and reliable. Still it offers "no guarantee against political influence on inflation."
The over 3.000-year-old history of money shows that "the private sector may innovate, but ultimately the public sector appropriates. At the end of the day, the government will always be able to control the rules," because price stability is crucial to prevent ordinary people from rising up against their leaders and politicians.
Rogoff believes " the best way to insulate central banks from political pressure would be to expand their toolkit to allow for effective negative-interest-rate policy, though this will take time... In the meantime, the Fed and other central banks will have to keep walking a tightrope that leaves them especially vulnerable to outside pressure." He is relieved that Janet Yellen is "able and willing to stand up to it."﻿

if you do not believe or are unsure if the economy has truly recovered as opposed to it being in a bubble, you can either a) raise rates and risk popping assettt prices just before elections, (crushing HRC) b) admit the economy is weak/phony (hurting HRC) and that you won't be raising rates soon, or c) claim the economy is strong and that you want to raise rates but you just need a little more data propping up the market, the strong economy narrative, and HRC all at the same time.

If you believe the economy is truly strong, you raise rates from historic lows by more than .25% since they started talking rate hikes 22 months ago.

If you truly believe the economy is strong, from historic liws you raise rates by more than .25% a year.

Simply because Janet Yellen continues to "talk" about rate hikes, in her tenure as Chair of the Fed she's only increased rates by a meager 25 basis points, after she and her cohorts at the Fed "discussed" a rate hike for over a year and did nothing. Again, we're "talking" about the potential for a "gradual rate hike, that will of course depend on economic data and the Fed's continuing assessment of the economy, employment and inflation." The bottom line is this: Yellen won't raise rates this year, CERTAINLY not before the election. I'd argue she won't raise rates after the election either. Did you watch her latest testimony? She discussed the Fed's consideration of the outright purchase of stocks in the open market. This would be the antithesis of a rate hike, as it would have the opposite effect -- rather than raising rates and tightening monetary policy so that we might, someday, be able to return to normalized levels of monetary intervention, if the Fed starts buying up stocks in the open market they are, once again, opening the liquidity spigots with ever more intervention. Today's ultra-loose monetary policy encourages excessive borrowing, heightened risk taking, and artificial inflation in financial asset prices (supported by higher aggregate debt, rather than growing incomes and rising productivity). For the last 8+ years (and even before, during Greenspan and Bernanke's tenure), we have been on a progressively uglier path with increasingly reckless monetary policies that allow debt to masquerade as "economic growth." In reality, QE, below-normal interest rates, and other policies encouraging heightened liquidity do not result in any incremental demand; these policies simply pull forward demand that would otherwise surfaced in the future. In essence, we're stealing from future demand by encouraging current spending, backed by unsustainable debt. When demand falls off a cliff as it simply cannot be pulled forward any further, the economy will suffer, and many debtors will default.

"..The economy is growing at a very modest rate around 2% and inflation is still well contained. This modest growth has only been possible because of the Federal Reserve's low interest policy. There are surely some households and businesses that are barely hanging on by their fingernails. They would possibly be unable to meet their financial obligations if the interest rates on their adjustable rate loans were increased by another 25 basis points.
An analogy for the decisions facing the Federal Reserve could be that of a ship that has been damaged by a storm and is leaking. Only by running the engines and the bilge pumps full out has Captain Yellen been able to keep the ship afloat and maintain a speed of only two knots. She convenes a meeting of the ship's officers. Some of the officers urge returning to normal operation of the ship's engines and the bilge pumps. They argue that if there were to be another storm, they would not be able increase engine speed anymore. Some say that a while ago when the ship was higher in the water, they should have reduced the speed and use of the bilge pumps. Saner officers point out that had they not kept the engines going at maximum they would now be under water and that now is a particularly bad time to reduce speed and pumping since there are many sharks circling the ship..."
http://seekingalpha.com/article/4002770

The Fed may not partisan in the sense of grossly directing policy to support a favored party, but it is dominated by an academic ideological wing that favors unconventional monetary policy. The problem is that Fed Chairman Bernanke was able to slip the QE policy through with limited public debate. To this day, Bernanke, his successor and other central bank voting members treat monetary policy like a technical scientific specialty that can only be addressed by, as James Grant put it, tenured Ph.D. economists. We may not experience Weimar-era inflation, but the world-wide asset bubbles could end so badly as to leave today's central bankers with the same ignominious reputation that befell Arthur Burns.

Why should anyone play at politics at all? If doctored metrics of productivity and market efficiency measure the meaning of life, government can achieve a philosophical/physiological "effective negative-interest-rate policy" directly by mandatory electronic pain-induction implants in the population, punishing them in proportion to their savings. The placement of such modules might be used to induce goose-stepping, reviving the domestic jack-boot industry, compelling the French to develop a parallel program to force-feed citizens, expanding the demand for medical services such as liver transplants - "Pâté, égalité, fraternité !"

In their seemingly unqualified cognitive commitments to the conventional and 'bold' inventions which really are just tweaks to the design of economic rat mazes, guys like Ken and Willem Buiter are blind to any philosophical implication, including what seems to me to possibly be their participation in a highly abstracted contemporary kind of fascism, matching populism as another conventional 'community of thought and practice' rooted in failing capitalist institutions.

Surely the Fed is thinking of the election. It would have been madness to change interest rates in any direction in July during the Democratic Convention and it would have been only slightly less mad to do so in September on the eve of the debate.

I see no Democratic bias because a raise in rates could be interpreted as evidence of prosperity or it could produce a short-term market sell-off and be negative for Democrats--and it would produce a charge of manipulation.

But the issue is not CPI, but asset inflation, as Trump and many, many others charge.

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